Renovating home ownership

Fintech, insurtech, edtech, medtech – the list of technology prefixes goes on, but they all have something in common and that’s a raft of startups within each sector pushing furiously to make a spectacular and meaningful impact. One more to add to the list is proptech (property technology); there is perhaps no other sector so notoriously inefficient and hamstrung by old processes or ingrained ways of thinking.

By Byron McCaughey, CoFounder of TRACK and guest lecturer on Innovation and Entrepreneurship, Imperial College Business School

Co-Founders of TRACKByron McCaughey and Henry Oakes

It’s a massive sector, worth billions in the UK alone, across areas like real estate agencies, mortgages, conveyancing and renovations, not to mention it being the biggest outgoing we all have on a monthly basis. Combine inherent inefficiencies with a big market and you undoubtedly get a wave of hungry founders pushing for change (and even hungrier VCs ploughing money into the space to the tune of $6.4 billion in funding since 2012).

When it comes to the inefficiencies of how real estate is traded, used and operated, there is no shortage of examples – from the antiquated process of renting a flat to the opaque construction industry, through to the way property is registered (side note: the Swedish equivalent of the UK Land Registry is piloting the first blockchain record of property transactions – pretty cool!).

The focus of this piece is home ownership, addressed through the lens of three startups (including my own) and the problems each solves. We all recently graduated from an accelerator programme run by PiLabs (Property Innovation Labs), Europe’s largest property techfocused VC.

Housing affordability is a problem the millennial generation knows all too well.

First up, affordability: a problem the millennial generation knows all too well.

Imperial College Business School Professor, David Miles, an ex-Bank of England guru, revealed analysis in 2017 showing that extraordinary house price inflation over the past 30 years was likely to continue for the next 50 years.

A few statistics highlighting affordability in the capital: 20% home ownership rate for 25–34 year olds in London. 15x average house price to income ratio. £115k average deposit for first-time buyers. 76% the proportion of first-time buyers getting help from family or the government.

Fairly grim reading if you are on the quest to own your home. However, don’t despair, the following three startups tackle the problem head-on.

Group Ladder – a multi-borrower mortgage designed for three or more people www.groupladder.com In other words, you can team up with your mates and/or family, pool your resources and, therefore, boost your buying power.

The unique selling proposition (USP) is that their credit engine allows lending against three+ incomes, which traditional high street banks do not allow.

Renter Buyer – a mortgage alternative www.renterbuyer.co.uk Simply put, they offer you the opportunity to own your home without a mortgage and, therefore, without requiring the hefty deposit or credit history which, when combined, create the biggest barrier to home ownership.

The solution is a rent-to-buy gradual home ownership plan where the would-be buyer pays two per cent up-front and then a proportion of their monthly payment goes towards buying equity in the home. They offer a three-year plan allowing customers to build up their deposit and credit score, and then to leave the programme by getting a traditional mortgage. Solutions provided by the likes of Group

Ladder and

Renter Buyer – along with government initiatives like Help to Buy – are useful because they help ease affordability issues and get people on the ladder. However, they increase complexity. Money, home, multiple people = friction, both functional and emotional.

To compound this, the process of managing your home finances simply does not meet the experience delivered in other areas, such as banking (Monzo), credit scores (ClearScore) and saving (Moneybox). We now demand simple, connected and beautiful personal finance experiences. That’s where my company comes in, which I founded with fellow full-time Imperial MBA graduate, Henry Oakes (2017).

TRACK – the home for home-owners www.wearetrack.com We are the first multi-person money manager designed for home-owners. Our technology gathers all the most important information, from AI-powered valuations to automated expenses and contributions tracking. We then present it beautifully, giving couples, siblings and friends one place to view, manage and transact all their home finances.

Imperial is hailed for its exploration in technology and innovation, so I really encourage you to dive into the real estate sector and put your own generational lenses on it. What would you like to be fixed? While I certainly hope startups like Group Ladder, Renter Buyer or TRACK benefit you in the future, I implore you to go one further; get out there and DIY.